The 20-Day Letter: A Tool, Not a Trap--Arizona Workers' Compensation

In Arizona's workers' compensation system, the 20-day letter is a procedural tool that allows insurance carriers to manage claims effectively. However, it's crucial to understand that this tool has specific, limited purposes, and misusing it can lead to legal challenges and potential penalties.

What is a 20-day letter?

A 20-day letter is a notification sent by a workers' compensation insurance carrier to a claimant. It generally informs the claimant that the carrier intends to close their claim if they do not respond or provide specific information within 20 days. The intent of a 20-day letter is to allow a carrier to close a claim when a claimant has abandoned it by discontinuing treatment or failing to respond to requests for information.

Appropriate Uses of a 20-Day Letter

There are specific situations where using a 20-day letter is appropriate:

• Claim Abandonment: A 20-day letter can be a valid way to close a claim when a claimant has unilaterally discontinued treatment or otherwise abandoned their claim and is not responding to communication. In such cases, carriers shouldn't be forced to keep claims open indefinitely.

• Lack of Response: If a claimant does not respond to a 20-day letter, it can result in a valid claim closure. This means if a carrier sends a 20-day letter and the claimant does not respond within 20 days, the carrier can close the claim.

  
  

Inappropriate Uses and Abuses of a 20-Day Letter

The specific situations when a 20-day letter is not appropriate and can be considered an abuse:

• Medical Reports Indicate Future Impairment: A 20-day letter is not a valid way to close a claim when a medical report in the file indicates that there will be permanent impairment. Specifically, a report that states an applicant will be stationary in six months does not support an immediate closure of a claim.

• Closing a Claim When Facts Are Contradicted: A 20-day letter cannot be based on facts that are contrary to those known by the carrier. This means that the carrier can't close a claim using a 20-day letter if carrier knows that a claimant continues to have symptoms similar to those for which a carrier accepted compensability. 

• Improper Closure of Claim: If an NCS is not supported by the materials upon which it is based, it is void. For example, in Valenzuela v. Industrial Comm’n, a notice was found to be void on its face because it was based on a letter that asserted, without supporting medical evidence, that the symptoms were no longer related to the industrial injury.

• Failure to follow proper procedure: An insurance carrier must provide proper notice of their intent to close a claim by providing a 20-day letter to Claimant. It is not appropriate to send 20-day letter to Claimant directly if represented by an attorney.

  
  

Case Law Examples:

• Roseberry v. Industrial Commission: This case established that a closing notice must be supported by the materials on which it is based. If it is not, then the notice is void.

• Parkway Mfg. v. Industrial Commission: This case determined that a 20-day letter with no response can result in a valid closure.

• NCR Corp. v. Industrial Commission: This case clarified that a 20-day letter cannot close a claim without permanent impairment where there is a medical report in the file indicating that there will be an impairment.

• Valenzuela v. Industrial Commission: This case shows a scenario where a notice was found to be void because it was not supported by medical evidence and was therefore improperly issued.

• Teller v. Industrial Commission: A 20-day letter based on facts that are contrary to those known by the carrier cannot be used to close a claim.

  
  

Consequences of Misusing a 20-Day Letter

Misusing a 20-day letter can have several negative consequences:

• Voided Closure: As shown in Roseberry and Valenzuela, a claim closure based on an improperly used 20-day letter can be deemed void.

• Legal Challenges: Improper closures can lead to legal challenges, including litigation, which can be time-consuming and costly for the carrier.

• Bad Faith Claims: Improper use of a 20-day letter can contribute to a claim of bad faith and/or unfair claims handling complaint at the ICA.

Conclusion

The 20-day letter is a tool for carriers to manage claims, not a method to unfairly deny benefits. When used correctly, it allows for the efficient closure of abandoned or inactive claims. However, it's essential for insurance carriers to adhere to the limitations imposed by law and case precedent to avoid legal challenges and ensure fair treatment of injured workers. Claimants, on the other hand, should always respond to any communication by their insurance carrier, especially when it is a 20-day letter and there is an intent to close the claim. Failure to respond may result in a valid closure of the claim, even if the claimant has not fully recovered.